Peer-to-peer lending is an increasingly popular topic in IELTS Writing Task 2, reflecting its growing impact on the financial sector. This subject has appeared in recent IELTS exams and is likely to continue being a relevant theme due to the rapid evolution of financial technology. Let’s explore a real IELTS question on this topic and analyze sample essays for different band scores.
Some people think that peer-to-peer lending platforms are a better alternative to traditional banks for borrowers and lenders. To what extent do you agree or disagree with this statement?
Analyzing the Question
This question requires candidates to discuss the advantages and disadvantages of peer-to-peer lending compared to traditional banking. It’s important to:
- Clearly state your position
- Provide balanced arguments
- Use relevant examples to support your points
- Conclude with a summary of your stance
Now, let’s look at sample essays for different band scores.
Band 8-9 Sample Essay
Peer-to-peer lending platforms have emerged as a disruptive force in the financial sector, challenging the dominance of traditional banks. While these platforms offer certain advantages, I believe that they cannot entirely replace conventional banking systems due to several limitations.
On one hand, peer-to-peer lending platforms provide significant benefits to both borrowers and lenders. For borrowers, these platforms often offer more competitive interest rates and a streamlined application process, making it easier to access funds quickly. This is particularly advantageous for individuals or small businesses that may struggle to secure loans from traditional banks due to stringent criteria. Lenders, on the other hand, can potentially earn higher returns on their investments compared to the low interest rates offered by savings accounts in conventional banks.
However, there are several reasons why traditional banks remain essential. Firstly, banks offer a wider range of financial services beyond lending, including savings accounts, insurance, and investment products. This comprehensive approach allows customers to manage all their financial needs under one roof. Secondly, traditional banks are subject to stricter regulations and government oversight, which provides a higher level of security for customers’ funds. In contrast, peer-to-peer lending platforms may be more vulnerable to fraud or defaults, potentially putting lenders’ investments at risk.
Moreover, traditional banks have the advantage of established infrastructure and expertise in risk assessment. They employ sophisticated algorithms and have access to extensive credit histories, allowing for more accurate evaluation of borrowers’ creditworthiness. This reduces the likelihood of defaults and ensures a more stable financial system overall. Additionally, banks play a crucial role in implementing monetary policies and maintaining economic stability, a function that peer-to-peer platforms cannot replicate.
In conclusion, while peer-to-peer lending platforms offer certain advantages in terms of accessibility and potentially higher returns, they cannot be considered a complete replacement for traditional banks. The comprehensive services, regulatory oversight, and systemic importance of conventional banking institutions make them an indispensable part of the financial ecosystem. Therefore, I believe that peer-to-peer lending should be viewed as a complementary service rather than a superior alternative to traditional banking.
[Word count: 345]
Band 6-7 Sample Essay
In recent years, peer-to-peer lending platforms have become more popular as an alternative to traditional banks. While these platforms have some advantages, I partially agree that they are better than conventional banks for borrowers and lenders.
One of the main benefits of peer-to-peer lending is that it often offers lower interest rates for borrowers. This is because these platforms have lower operating costs compared to traditional banks, which allows them to offer more competitive rates. Additionally, the application process for loans on peer-to-peer platforms is usually faster and more convenient, making it easier for people to access funds when they need them.
For lenders, peer-to-peer platforms can provide higher returns on their investments compared to the low interest rates offered by savings accounts in traditional banks. This makes it an attractive option for people looking to grow their money more quickly.
However, traditional banks still have some important advantages. They offer a wider range of financial services, such as savings accounts, credit cards, and mortgages. This means customers can manage all their financial needs in one place. Banks are also more heavily regulated, which provides greater security for customers’ money.
Another point to consider is that peer-to-peer lending can be riskier for lenders. If a borrower defaults on their loan, the lender may lose their investment. Traditional banks, on the other hand, have more experience in assessing risk and have better protection against defaults.
In conclusion, while peer-to-peer lending platforms offer some advantages, they are not necessarily better than traditional banks in all aspects. Both have their strengths and weaknesses, and the best choice depends on individual needs and circumstances.
[Word count: 275]
Band 5-6 Sample Essay
Nowadays, peer-to-peer lending is becoming more popular. Some people think it is better than traditional banks for borrowers and lenders. I agree with this opinion to some extent.
Firstly, peer-to-peer lending has some advantages. It can offer lower interest rates for people who want to borrow money. This is good because people can save money. Also, it is often faster to get a loan from these platforms compared to banks. For lenders, they can earn more money by lending on these platforms than putting their money in a bank account.
However, traditional banks are still important. They offer many different services like savings accounts and credit cards. Banks are also safer because they are controlled by the government. This means people’s money is more protected in a bank.
One problem with peer-to-peer lending is that it can be risky for lenders. If someone doesn’t pay back their loan, the lender might lose their money. Banks are better at checking if someone can pay back a loan.
In conclusion, peer-to-peer lending has some good points, but it is not always better than banks. Both have good and bad things, so people should choose what is best for them.
[Word count: 189]
Explanation of Band Scores
Band 8-9 Essay:
- Fully addresses all parts of the task with a clear position
- Presents well-developed ideas with logical organization
- Uses a wide range of vocabulary accurately
- Demonstrates a wide range of grammatical structures with flexibility and accuracy
- Uses cohesive devices effectively
Band 6-7 Essay:
- Addresses all parts of the task, though some aspects are more fully covered than others
- Presents relevant main ideas but some may be inadequately developed
- Uses an adequate range of vocabulary with some errors
- Uses a mix of simple and complex sentence forms
- Has adequate paragraph organization but may lack overall coherence
Band 5-6 Essay:
- Addresses the task only partially, with limited development of ideas
- Presents some main ideas but these are limited and not well-supported
- Uses a limited range of vocabulary, which may be repetitive
- Uses mainly simple sentences with some errors
- Has some organization but lacks overall coherence
Key Vocabulary to Remember
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Peer-to-peer lending (noun): A method of debt financing that enables individuals to borrow and lend money without using an official financial institution as an intermediary.
Pronunciation: /pɪər tə pɪər ˈlendɪŋ/ -
Disruptive (adjective): Causing or tending to cause disruption; innovative or groundbreaking.
Pronunciation: /dɪsˈrʌptɪv/ -
Streamlined (adjective): Efficient and concise; made simpler or more efficient.
Pronunciation: /ˈstriːmlaɪnd/ -
Creditworthiness (noun): The extent to which a person or company is considered suitable to receive financial credit, often based on their reliability in paying money back in the past.
Pronunciation: /ˈkredɪtwɜːðɪnəs/ -
Infrastructure (noun): The basic physical and organizational structures and facilities needed for the operation of a society or enterprise.
Pronunciation: /ˈɪnfrəstrʌktʃər/ -
Complementary (adjective): Combining in such a way as to enhance or emphasize the qualities of each other or another.
Pronunciation: /ˌkɒmplɪˈmentəri/ -
Stringent (adjective): Strict, precise, and exacting.
Pronunciation: /ˈstrɪndʒənt/ -
Default (noun): Failure to fulfill an obligation, especially to repay a loan or appear in a court of law.
Pronunciation: /dɪˈfɔːlt/ -
Ecosystem (noun): A complex network or interconnected system.
Pronunciation: /ˈiːkəʊsɪstəm/ -
Monetary policy (noun): The actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply.
Pronunciation: /ˈmʌnɪtəri ˈpɒlɪsi/
In conclusion, the topic of peer-to-peer lending and its impact on traditional banking is likely to remain relevant in IELTS Writing Task 2. As financial technology continues to evolve, candidates may encounter similar questions about the changing landscape of financial services. To prepare, practice writing essays on related topics such as:
- The impact of digital currencies on traditional banking
- The role of artificial intelligence in financial services
- The advantages and disadvantages of cashless societies
Remember to structure your essays clearly, use a range of vocabulary and grammatical structures, and provide specific examples to support your arguments. Feel free to practice writing an essay on this topic and share it in the comments section for feedback and discussion.
How fintech is disrupting traditional banking offers more insights into this evolving field, which can help you develop a deeper understanding of the topic for your IELTS preparation.